Along an indifference curve, as the consumer reduces the quantity of Good A in favor of more Good B the marginal rate of substitution of Good A for Good B will
A) fall.
B) rise.
C) stay the same.
D) fall and eventually turn negative.

Question

Quizplus · Accepted Answer

The marginal rate of substitution (MRS) measures the rate at which a consumer is willing to substitute one good for another while maintaining the same level of satisfaction. As the consumer reduces the quantity of Good A in favor of more Good B, the MRS of Good A for Good B will fall. This is because the consumer will be willing to give up fewer and fewer units of Good A for each additional unit of Good B as they approach the optimal level of consumption that maximizes their satisfaction. Hence, option A is the correct answer.

Along an Indifference Curve, as the Consumer Reduces the Quantity